An American put option on a stock that pays no dividends:
A)May be exercised early if the stock drops sharply before maturity.
B)Is always exercised early when the the put is deep in-the-money,and the volatility of the stock rises sharply from its initial level.
C)Is not exercised early unless the growth in the stock is lower than the rate of interest.
D)Is never exercised early.

Question

Quizplus · Accepted Answer

An American put option can be exercised early if the stock drops sharply before maturity, allowing the holder to realize the gains before the stock price drops further. However, this is not a guarantee and depends on the holder's decision to exercise the option early. The other options (B, C, and D) do not accurately describe the behavior of an American put option on a stock that pays no dividends.

An American Put Option on a Stock That Pays No